(a) Determine Consolidated' s total profit function. (b) Assuming that Consolidated is effectively able to Icharge different prices in the two markets, what are Ithe profit-maximizin price and output levels for the product in the two markets? What is Consolidated' s total profit under this condition? (c) Assuming that Consolidated is required to charge the same pric in each market, what are the profit maximizing price and output levels? What is Consolidated' s total profit under this condition?
(a) Determine Consolidated' s total profit function. (b) Assuming that Consolidated is effectively able to Icharge different prices in the two markets, what are Ithe profit-maximizin price and output levels for the product in the two markets? What is Consolidated' s total profit under this condition? (c) Assuming that Consolidated is required to charge the same pric in each market, what are the profit maximizing price and output levels? What is Consolidated' s total profit under this condition?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Transcribed Image Text:1. Consolidated Salt Company sells table salt to both retail grocery
chains and commercial users (e.g., bakeries, snack food makers,
etc.). The demand function for each of these markets is:
Retail grocery chains : P1 = 180 – 8Q1
Commercial users P2 = 100 – 4Q2
where P1 and P2 are the prices charged and Q1 and Q2 are the
quantities sold in the respective markets. Consolidated's total cost
function (which includes a "normal" return to the owners) for salt is:
TC = 50 + 20(Q1 + Q2)
(a) Determine Consolidated' s total profit function.
(b) Assuming that Consolidated is effectively able to Icharge
different prices in the two markets, what are Ithe profit-maximizing
price and output levels for the product in the two markets? What is
Consolidated' s total profit under this condition?
(c) Assuming that Consolidated is required to charge the same price
in each market, what are the profit maximizing price and output
levels? What is Consolidated' s total profit under this condition?
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